Fitch Ratings downgraded the rating on five gas prepaid revenue bond transactions to “A+” from “AA-” with a “negative” outlook. The action follows Fitch’s downgrade to “A+” from “AA-” for Merrill Lynch & Co. Inc.

The Merrill downgrade follows the firm’s revised earnings for third quarter 2007. The size of trading losses and unrealized gains unexpectedly overwhelmed the performance of the consolidated firm. Additional losses were recognized in leveraged financing and mortgage further impacting the quarter’s performance. This rating action applies to the following series of bonds:

The long-term ratings and outlook on the bonds is determined by Fitch’s assessment of their structure and the entities involved in each transaction, including Merrill Lynch & Co. In each case, bond proceeds were used to fund a natural gas prepay transaction between the issuer and Merrill Lynch Commodities Inc., the supplier.

Earlier this month, Roseville received a downgrade from Standard & Poor’s Ratings Services because of Merrill’s recent financial disclosures (see Daily GPI, Oct. 10).

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